Question
A company has a 13% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: 0 1 2
A company has a 13% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows:
0 1 2 3 4 5 6 7 |
Project A | -$300 | -$387 | -$193 | -$100 | $600 | $600 | $850 | -$180 |
Project B | -$400 | $133 | $133 | $133 | $133 | $133 | $133 | $0 |
What is each project's NPV? Round your answer to the nearest cent. Project A $ Project B $
What is each project's IRR? Round your answer to two decimal places. Project A % Project B %
What is each project's MIRR? (Hint: Consider Period 7 as the end of Project B's life.) Round your answer to two decimal places. Project A % Project B %
Construct NPV profiles for Plans A and B. Round your answers to the nearest cent.
Discount Rate | NPV Plan A | NPV Plan B |
0% | $ | $ |
5 | $ | $ |
10 | $ | $ |
12 | $ | $ |
15 | $ | $ |
18.1 | $ | $ |
24.18 | $ | $ |
Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places. %
What is each project's MIRR at a WACC of 18%? Round your answer to two decimal places. Project A % Project B %
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